Fujairah Collage

Monday, December 13, 2010

Amadeus, a travel technology partner and transaction processor for the global travel and tourism industry, launched today a report which finds the Middle East is on the brink of becoming the world's dominant travel hub.

The report, Securing the Prize for the Middle East, sets out what the region should focus on to fulfill its potential as a dominant global hub.

Here are the salient words from the Vice President’s Foreword followed by the Executive Summary in brief.

Foreword in Brief1. The recent past has been a rollercoaster ride for business in general and the aviation industry in particular. The recession has affected virtually every sector, both locally and globally.

2. In this study we focus on what we can control, looking at ways the Middle East region can galvanise its position as a travel hub of the future.

3. And in the Middle East, the future looks positive.

4. The region has remained relatively stable in the midst of the global turmoil of recent times, and has even seen growth across many sectors, including aviation and tourism.

5. Investment in infrastructure developments such as new airport extensions…Burj Khalifa, the world’s tallest tower, along with a strategic geographical location, continue to boost travel through the region.

6. The IT industry also remains strong and airlines and travel companies in the Middle East have proven to be innovative in terms of technology adoption.

7. The Middle East is thus well placed to become the world’s premier travel hub – although it is clear in this report that a number of things remain to be done in order for this vision to become a reality.

We have commissioned this report to focus on what the Middle East must do to fulfill its potential as a dominant global hub.

Executive Summary in BriefProgress in the Past1. Over the past few years, largely driven by huge oil and gas revenues, the Middle East has seen exponential growth in many industry sectors.

2. In an attempt to diversify the region’s industry from petroleum derived incomes, national funds have been heavily invested in infrastructure projects such as commercial real estate (offices and hotels) and public transportation, including airports and national airlines.

3. The boom in the aviation sector is poised to have a significant influence on future global air traffic and the Middle East’s strategic geographical location will enable the emerging national carriers to connect most metropolises via a single hub. A global travel hubwould bring transformative effects to the region’s economy, allowing it to attract other industries and become more sustainable in the long term.

2. Huge investments, especially in the oil and gas sector, which have historically resulted in an increased demand for business travel and in turn fuelled the aviation and construction industries. The aviation sector and tourism has been massively promoted in recent years.

3. Government social and political goals focused on job creation, which on one hand can help create the pool of skilled labour needed to support the region’s international hub ambitions and on the other can also lead to increased affluence and local and regional air travel.

4. Its strategic location as a hub for passenger transit between Europe and the major growth market of Asia Pacific.

5. Major investment in the air travel industry (airlines, airports and air control), including $86 billion USD earmarked for Middle East airports in the coming years and predicted passenger and cargo traffic growth of 8% annually until 2015.

6. Growing international, intra-Middle East and domestic tourism, with the number of tourists to the Middle East projected to double to 136 million by 2020 versus 54 million in 2008.

7. Advanced use of IT, due to rapid establishment and development of new carriers in the past decade, who invest in new IT rather than possessing legacy systems. This IT is deployed for the efficient distribution of travel products and services, with airline tickets, hotel bookings and many other components of the travel and transport supply chain distributed via electronic channels such as global distribution systems and the Internet.

8. Increasing intra-Middle East traffic as a result of low-cost carriers (LCCs) entering the market. In addition to tourism and business travel, visiting friends and relatives (VFR) and religious travel have gained significance and are expected to grow rapidly.

Factors which could Hinder Growth1. Political and social instability in the Middle East region.

2. Decline in growth in the global airline industry.

3. Failure to improve the regulatory framework, covering issues such as cross-border coordination of large projects, harmonised visa regulations, measures to ease airspace congestion and lack of transparency in the financial sector.

4. Poor integration of Middle East carriers with global air alliances such as Star Alliance and oneworld.

OverallThe region is fortunate, however, that its hydrocarbon exports should continue to provide, for the medium term at least, sufficient funds to finance whatever investments are needed to make the development of the global hub a reality.

If political stability is maintained and travel demand to the region can be expanded through international tourism, the Middle East should be able to successfully steer a course to reach its target to become the world’s dominant travel hub by 2025.

Nonetheless, in order to ensure continued growth, the aviation and tourism industries must therefore work hard to attract new business and leisure travellers to the region as well as capitalise on transit passengers.

Eyes on the PrizeThe prize benefits require focus and determination on behalf of the travel industry and governments to both address the challenges and seize the opportunities that emerge in the years ahead.